Element 25 raises $35.5m to expand WA manganese project to meet battery and steel alloy demand
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Manganese company Element 25 (ASX:E25) has raised $35.5m of fresh capital to expand production at its Butcherbird project in WA to 1 million tonnes per year from February 2022.
Investors subscribed to a share placement priced at $2.20 per share, representing an 8 per cent premium to the 30-day volume weighted average price prior to the placement.
The company is targeting the aluminium and steel alloys markets and the battery metals sector with different grades of manganese concentrate produced from its project.
Swiss ESG fund strongly supported the capital raising that was handled by Blackwood Capital as the lead broker to the share placement for 16.1 million shares.
Element 25 will accelerate work on a new plant to produce lithium-ion, high purity battery-grade manganese sulphate (HPMSM) from concentrate at its Butcherbird project for new energy vehicles (NEVs).
Wet commissioning has started at the Butcherbird project and the company intends to progressively raise production over the next three months to its nameplate capacity.
The company said in a March-dated presentation that its first product shipment was due imminently.
Manganese is fast emerging as an increasingly important ingredient for EV batteries because of potential supply constraints for nickel and cobalt in battery production.
EV battery producers are being forced to look to high manganese cathodes to produce the vast amount of cathode material needed for the EV industry in the years ahead.
Germany-based automaker Volkswagen, which held its Power Day last week, an event equivalent to Tesla’s annual Battery Day, said it will increase manganese content in its batteries.
“VW is moving to a high manganese cathode for the majority of its vehicles. High manganese means better energy density and lower cost,” said Element 25 in a presentation.
VW plans to build six gigafactories in Europe to produce batteries for its EVs, develop a Europe-wide network of 18,000 fast-charging points for EVs, and collaborate with its suppliers.
Element 25 said its Butcherbird expansion project is ideally placed to meet rising battery sector demand for manganese as it has already undertaken development work in 2019-2020.
The company has a simple, unique, ambient temperature and atmospheric pressure leach process for its ores which when combined with offsets will target the world’s first Zero Carbon Manganese for EV cathode manufacture.
NEVs or hybrid EVs are forecast to have a 58 per cent share of the global new vehicle market by 2040 with sales of 54 million by this date, displacing 17.6 m barrels of oil each day.
“For cobalt there are serious ethical concerns around production methods. Nickel and cobalt have supply constraints, manganese does not,” said the company in its presentation.
Element 25 has completed a pre-feasibility study to develop its Butcherbird manganese deposit to produce manganese concentrate for export markets in a relatively short timespan.
The project has a modest capital requirement and is positioned to generate early cashflow, and delivery of the first production stage of the project is underway and fully funded.
The PFS stated the Butcherbird project has the potential to grow beyond its initial stage one production phase, with a possible expansion within 12 months of its initial commissioning.
In addition to producing manganese concentrate for export, the company has completed a research and development work into producing additional high purity manganese products.
These products include high grade battery grade manganese sulphate (HPMSM) and high purity electrolytic manganese metal (HPEMM) through its efficient ore extraction process.
Element 25 said it intends to integrate a renewable energy source into its manganese project to target an eventual zero-carbon emissions goal for Butcherbird.
“A cleaner, lower carbon flowsheet and high penetration renewable energy will place Butcherbird at the forefront of sustainable high purity manganese production,” said the company.
Butcherbird will also supply manganese concentrate into the aluminium and steel sectors to produce specialty alloys and there is currently no substitute for manganese in steel.
Manganese is the fourth most-used metal globally in terms of annual consumption tonnage and is the cheapest, most abundant of cathode materials compared to nickel and cobalt.
Element 25 is aiming for an annual production of 341,000 tonnes per year from Butcherbird in its first production phase for a capital cost of $20.3m.
The project is expected to generate $583m of pre-tax cashflow on a net present value basis in its first production phase, rising to $1.13bn in its expansion phase also costing $20.3m.
The PFS published a maiden ore reserve for the Butcherbird project of 50.5 million tonnes, and the project straddles WA’s Great Northern Highway and Goldfields Gas Pipeline.